Plot

Terry recruits an expert in the way of the fist. Daniel walks away from a fight, and Johnny and Chozen pick one. In prison, Kreese confronts old demons.

Silver brings in an ally to help him with his plans to take over karate in the Valley. In prison, Kreese questions his past and his present while rising to new power, while Daniel's friends and family rally around him after his crushing defeat at Silver's hands.—Gislef

Terry Silver meets his private jet at an airstrip. Six tough-looking men, emerge, as well as their leader; Kim Da Eun, granddaughter of Silver and Kreese's sensei and Way of the Fist originator, Kim Sun Yung. He tells her he flew her and her team all the way to the Valley to train and test his Cobra Kai students, and make them the best in the country. Kim Da Eun is not interested in Silver's money, but he offers her a full partnership in the dojos, as well as the opportunity to leave her own legacy on the world stage. She is intrigued, and decides to see what his American students have to offer.

A week after Daniel's brutal beating at the hands of Silver, Amanda, Sam, Johnny, and Chozen discuss what to do next. Johnny wants to take revenge as soon as possible, but Chozen and Amanda insist Daniel needs more time to heal before making any further moves against Cobra Kai. Daniel emerges to their surprise, dressed in a suit and ready to go to work at LaRusso Auto. They explain their plans, but while he appreciates their effort, he tells them he will not continue the fight. They are shocked that he is giving up, but he tells them that trying to fight back against Terry was a mistake. Karate has only ever hurt the people around him. His daughter, his students, Robby. He will not risk losing his family again, even if it means letting Silver win. His wife and former rivals try to get him to reconsider, but he is adamant. He never understood before why Mr. Miyagi would sometimes turn from a fight, but now he understands that it is simply not their job to save the world. He puts on sunglasses to hide his bruises, and limps to work.

Tory goes to visit Kreese in prison, and update him on how things are going. Unfortunately, their scheme to throw Terry off by having Daniel investigate Stingray has failed. Silver is continuing to expand. Tory feels guilty that Daniel got hurt, but Kreese sees it as an added bonus. His attitude makes Tory wonder if he sees her as just another pawn, but he promises she can trust him. She is anxious to leave Cobra Kai as soon as possible, but Kreese asks her to stay a little longer. He has a plan to obtain an early release, but until then he tells Tory to stay alert and be ready for any slip-ups Silver might make. She agrees. Meanwhile, Devon has been training at Topanga Karate ever since Johnny shut down Eagle Fang. Their sensei welcomes in their new owner-operators, Terry Silver and his new Cobra Kai senseis, The Fist, along with his poster child, Tory. Topanga Karate, along with many other dojos in the valley, is being transformed into another Cobra Kai location. Terry replaces the old sensei with one of his own, and invites all of the current students to take a Cobra Kai gi if they wish to stay and train under the best. Every student takes one, except Devon who decides to wait and see what Cobra Kai has to offer. Terry leaves to continue his expansion, but Kim Da Eun orders Tory to stay and help her test the new recruits.

Johnny is confused and frustrated that Daniel will not keep fighting. Amanda tells him Silver has gotten into his head in a profound way. Meanwhile they are running out of time to react, as Silver's expansion is picking up speed. Sam shows them a live stream of Terry welcoming Topanga Karate into the Cobra Kai fold, and Johnny decides to go there immediately and attack Silver. Amanda tries to stop him, but Chozen goes with him. Amanda and Sam wonder if at this point, it might be too late to help Daniel overcome his defeat.

In prison, Kreese is being intimidated by a gang of larger, younger inmates, who demand a tribute of his Jello each day. For the sake of his reputation, and hoping to garner an early probation, he keeps his temper. In a conversation with the prison psychiatrist, he tells her that he is making friends very easily, and despite his age, is managing to stay out of trouble, she seems impressed by his easygoing demeanor. At Topanga, Kim Da Eun and her team drill the students. Devon is angry at seeing Tory, having lost to her at the All-Valley, but Tory gives her some technique pointers that improve her strikes. Devon still hasn't officially joined Cobra Kai, and maintains that Tory only beat her because of the poor referee. When Tory asks why she doesn't just leave, Devon remembers her mothers advice; the only way to truly lose is by giving up. She also tells her that her mom died after battling cancer, a situation Tory can relate to. Tory tells Devon to channel her anger into her fists. Kim Da Eun decides its time to see how the students fare against each other. While they warm up, Johnny and Chozen arrive outside. Johnny is confident that he can take Silver this time, but Chozen isn't so sure. They start trying to one-up each other over who was a worse bully to Daniel in their teens, laughing over how much they hated him back then, but admit that he always fought for what was right. They start bragging about which of Daniel's most noble and badass exploits they witnessed, before arriving at the dojo. Johnny sees Devon training, and almost goes in after her immediately, but Chozen holds him back to wait until a more opportune moment.

Kreese receives a letter from the prison board. His request for parole has been denied, at his psychiatrist's recommendation. He asks her about this, and she tells him that she has spoken to hundreds of liars and psychopaths in her career, and has seen though his 'good soldier' persona. She does however give him another chance to speak with her honestly. He goes, but is closed off. She pushes him to tell her why he became such a violent person, and while she speaks, Kreese sees visions of the people who've shaped his life. His sweetheart Betsy, who's death hardened him, his Captain, who's training and merciless win-at-all-costs lessons built him into a strong warrior, Terry Silver, who put him back in a cage and filled him with more hate than ever, his new protege Tory, who looks up to and trusts him, and his first protege and deepest regret, a teenage Johnny, who accuses him of wanting to make his students like himself. Kreese admits he never wanted to hurt them. He wanted to make them better than him. At least he sees his own younger self, who tells him he can find a way to let the good man thats trapped inside him out again.

Kim Da Eun tells her students of the training methods she and her fellow Way of the Fist trainees endured in Korea, and wants to test the determination of her new brood. She pits Tory against Devon in an exercise. Devon must grab a stick off the table, Tory must stop her. Devon easily outmaneuvers Tory the first time, and Kim angerly tells Tory not to hold back. Tory fights harder, driving Devon back, but Kim constantly pushes her to hit harder and not accept defeat. Despite Devon's agility, Tory pushes her back and kicks her to the ground, pleasing Kim. Shaken by Tory's ferocity, Devon runs out as the class ends. That evening, Chozen and Johnny enter and confront the sensei, Hyan Woo. They demand to see Terry, who isn't there, and Woo laughs at the thought of them ever being a match for himself, let alone Terry. Johnny is more than happy to test that theory as Woo attacks him. He almost takes Johnny down before Chozen steps in, but even then it's a close fight. He holds his own until Johnny and Chozen, fighting side by side, manage to knock him down. However, Kim Da Eun and the rest of the Fist enter. She recognizes Chozen from Terry's description, and assumes the man with him is Daniel LaRusso, which Johnny takes offense to. Chozen tells her that Silver must pay for what he did to Daniel, and she is shock that they would choose to fight them, although more than willing. Chozen tells Johnny it would be foolish to take on all of them in their own dojo. Johnny tells them they won't be allowed to take over the Valley, but Kim Da Eun reminds him that it's already done.

The next day at training, Tory sees Devon enter, dressed in a Cobra Kai gi. She has decided to join Cobra Kai full time. Terry congratulates Tory on her mentoring, as Devon asked to join the flagship dojo to learn more from her. Tory points out that Devon failed the exercise, but Kim reveals that test was for her, not Devon. She needed to know if Tory had the strength to become something greater than just another student. And she passed with flying colors.

Johnny and Chozen brief Amanda and Sam on the previous day's events. Chozen defeated six local senseis alone, but it took both him and Johnny to match a single one of Kim's international students. Johnny still thinks he could have handled them, but with his blunt approach and Chozen's relative inexperience in the Valley, Amanda tells them that if they are to have any hope of resisting Silver and his minions, they will need Daniel to lead them. Sam understands how Daniel feels, the feeling that karate has only made their lives worse, until she herself realized how important its lessons are in life, and how much it has helped her and those around her who needed guidance and protection. Mr. Miyagi knew when to walk away, but he also fought when he had to. If he was still there, he would tell Daniel their fight is one they cannot give up on, no matter the risk.

The leader of the gang that has been harassing Kreese in prison comes into his cell to collect his tribute. Kreese doesn't respond, so the man hits him. While the others laugh, Kreese, feeling like his younger self and with nothing left to lose, retaliates and mercilessly beats all of the men into submission. The rest of the men in the prison nickname him "Sensei", as it becomes clear he is now the one calling the shots.

Amanda brings Daniel to Miyagi-Do. She shows him inside, and he is hesitant when she shows him the door to the one part of the house he has not touched since his mentor passed away. Amanda encourages him, and he enters Mr. Miyagi's old room, exactly as he left it years ago. It is full of memorabilia, including the picture of Miyagi's wife, the note to paint the house he left for Daniel when he first started training him, and one of his precious bonsai trees. Daniel is overcome seeing everything, as Amanda tells him that the night before they were married, she got nervous and came to Mr. Miyagi for advice. He told her that it is always easier to hide from troubles then to face them, and that though Daniel could be a handful at times, he would always fight for what he believed in, most of all his family and friends. She tells him she believes fighting back against Terry Silver is the right thing to do, and pledges to support him from now on. Daniel is grateful, but still worries that continuing the struggle will only make things worse, and he cannot bare letting his kids down again. Robby appears with Sam, and tells him that he didn't fail him. Daniel took in a messed up kid and gave him a second chance for a good life. Daniel apologizes that his attempts to help him put him through so much, but Robby says it was he who didn't listen to Daniel about Cobra Kai, and didn't understand how hard it is to be a mentor until he tried to help someone himself. Someone who is now stuck in Cobra Kai along with several others he cares about. He and Sam tell him that there are many kids out there that don't have anyone to stand up for them, and he can't give up on them either. They are all ready to join the battle. They go outside to find the Miyagi-Do and Eagle Fang students, along with Johnny, Chozen, and Anthony, ready to stand with him. Surrounded by his friends, family, and pupils, Daniel's resolve is restored, and the senseis and students prepare to resume their training.